Aging Investments Struggle to Leave the Nest

Nautic Partners and Norwest Equity Partners have entered into a definitive agreement to sell Gaymar Industries to Stryker (NYSE: SYK) for $150 million in cash. The company manufactures medical devices for temperature and pressure ulcer management, and its products are currently being sold by Stryker to acute care customers in North America as part of an existing 10-year OEM relationship. Nautic and Norwest acquired Gaymar in a 2003 LBO from Cortec Group.

The recent financial crisis disrupted not only private equity investment, leaving the PE industry with a large capital overhang, but also the exit markets, creating a large overhang of overly mature investments in PE portfolios. For example, private equity investors made 1,203 investments in 2003, and 283 of those investments remain in those private equity firms' portfolios today, according to the PitchBook Platform. In aggregate, those 283 investments totaled well over $15 billion at the time of investment. This overhang of aging portfolio investments will continue to be a significant challenge to PE firms, especially with the challenging exit market today.